GAAP Diluted EPS $0.70; Non-GAAP Diluted EPS
$0.74(1)
Net New Client Assets of $29B
Average Client Trades per Day of 1 Million
Client Experience Remains No. 1 Priority
TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released
results for the first quarter of fiscal 2020.
Financial results for the quarter ended Dec. 31, 2019 include
the following:(2)
- Net new client assets of $29 billion, an annualized growth rate
of 9 percent
- Total client assets of $1.4 trillion
- Record average client trades per day of 1 million
- Net revenues of $1.3 billion
- Pre-tax GAAP income of $491 million, or 38 percent of net
revenues
- $0.70 in GAAP earnings per diluted share, on net income of $379
million
- $0.74 in Non-GAAP earnings per diluted share(1)
Steve Boyle, interim president and chief executive officer,
said, “History was made on the first day of our new fiscal year
when the cost to trade went to zero for most trades, resulting in a
new world in discount brokerage where price no longer clouds the
comparison for trades. Trading was very strong in the first quarter
averaging 1 million trades per day – for the first time in our
history – which helped offset a portion of the revenue impact from
zero commissions. We had 38 days eclipsing 1 million trades in the
first quarter, compared to 23 days in all of fiscal 2019. The
increased trading volume, reflecting more frequent, smaller trades,
was driven largely by an uptick in equity trading following our
pricing changes, as well as market volatility, geopolitical
headline news, and strong retail news heading into the holiday
season. Trading is up roughly 40 percent January to-date, averaging
1.4 million trades per day.”
Boyle continued, “New and existing clients rewarded us with
increased business and satisfaction scores. With the move to zero
commissions, the immediate, positive impact to organic growth by
way of new accounts and assets is indicative of the strength of our
client value proposition in an ‘all else equal’ marketplace. In the
retail channel, attrition slowed following our pricing changes but
picked up again after the Schwab acquisition news. Outflows are
in-line with the trends we observed at Scottrade in 2016, which
normalized after the first two months following the deal
announcement. On the institutional side of our business, new
account activity and retention remained strong with only minor
impacts to net new assets following the Schwab announcement and no
meaningful changes in trends. Institutional net advocate and client
experience scores remain strong as advisors continue to value our
technology and service. Our National LINC conference next week
presents us with a timely opportunity to engage with clients.”
Boyle concluded, “Today, we were named the No. 1 overall broker
in the StockBrokers.com 2020 Online Broker Review, with thinkorswim
recognized for No. 1 desktop platform and No. 1 trader app.
Delivering a best-in-class client experience has been our focus for
some time – a badge of honor for our employees who have remained
committed to our mission and purpose over what was a very eventful
quarter. Now we look ahead at an opportunity to join forces with
Schwab, which will pool our complementary resources and expertise
to meet our commitment to self-directed investors and independent
registered investment advisors. Until the deal closes, which we
expect will happen in the second half of 2020, we will continue to
operate as separate entities focused on growing and retaining
client relationships, retaining key talent, and winning in the
marketplace. Required filings are in process, and integration
planning teams are being formed. The TD Ameritrade team will be
headed by the same leader responsible for our successful
integration of Scottrade. Otherwise, it’s business as usual. The
competitive environment has intensified post-announcement, as
expected, and we remain fully engaged in continuing to deliver a
best-in-class client experience as we plan for the future.”
Interim chief financial officer Jon Peterson commented, “We are
pleased with our very strong first quarter results, which position
us well to deliver profitable growth in fiscal 2020. The revenue
impact of moving to zero on commissions was less severe than
expected due to record trading. While there was another Federal
Reserve interest rate cut, cash balances continued to grow, which
partially offset declining net interest margins. We recognized some
notable items in the quarter related to fluctuations in the yield
curve, executive transition costs, and deal-related professional
services spend which adversely impacted earnings per share by 6
cents.”
Peterson concluded, “We have a long history of focusing on what
we can control and delivering on our plans in the face of
uncertainty. This quarter was no different, and we are confident we
will continue to do so. We remain flexible, anticipating our
priorities will continue to evolve. We have a regular review
process in place to ensure we are managing expenses and delivering
on our financial targets. Specific tactics may shift as we move
through the year, but our goals remain unchanged.”
$0 commission applies to online U.S. exchange-listed stocks,
ETFs, and option trades. $0.65 per options contract fee applies to
options trades, with no exercise or assignment fees. A $6.95
commission applies to online trades of over-the-counter (OTC)
stocks which includes stocks not listed on a U.S. exchange.
Capital Management The company paid $168 million in cash
dividends its first fiscal quarter, or $0.31 per share.
The company has declared a $0.31 per share quarterly cash
dividend, payable on Feb. 19, 2020 to all holders of record of
common stock as of Feb. 5, 2020.
In the December quarter, the company paid $143 million in cash
to repurchase 3.7 million shares. Per terms of the acquisition
agreement with Schwab, the company suspended its stock repurchase
program, as is customary.
More information about TD Ameritrade’s upcoming corporate events
is available via the company’s Calendar which is located on the
"Investor Relations" page of www.amtd.com.
Interested parties should visit or subscribe to newsfeeds at
www.amtd.com for the most up-to-date information on corporate
financial reports, press releases, SEC filings and events. The
company also communicates this information via Twitter,
@TDAmeritradePR. Website links, corporate titles and telephone
numbers provided in this release, although correct when published,
may change in the future.
Source: TD Ameritrade Holding Corporation
About TD Ameritrade Holding Corporation TD Ameritrade
provides investing services and education to approximately 12
million client accounts totaling approximately $1.4 trillion in
assets, and custodial services to more than 7,000 registered
investment advisors. We are a leader in U.S. retail trading,
executing an average of approximately 1 million trades per day for
our clients, more than a quarter of which come from mobile devices.
We have a proud history of innovation, dating back to our start in
1975, and today our team of nearly 10,000-strong is committed to
carrying it forward. Together, we are leveraging the latest in
cutting edge technologies and one-on-one client care to transform
lives, and investing, for the better. Learn more by visiting TD
Ameritrade’s newsroom at www.amtd.com, or read our stories at Fresh
Accounts.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org) / SIPC (www.SIPC.org)
Safe Harbor This document contains forward-looking
statements within the meaning of the federal securities laws. We
intend these forward-looking statements to be covered by the safe
harbor provisions of the federal securities laws. These statements
reflect only our current expectations and are not guarantees of
future performance or results. These statements involve risks,
uncertainties and assumptions that could cause actual results or
performance to differ materially from those contained in the
forward-looking statements. In particular, we need to introduce new
products and services and update or enhance existing products and
services to remain competitive. Inability to do so could have
adverse effects on our business and results of operations. Other
risks, uncertainties and assumptions that could cause our actual
results or performance to differ materially from those contained in
our forward-looking statements include, but are not limited to:
risks related to the pending acquisition of TD Ameritrade by
Schwab, including, among others, the risk that expected revenue,
expense and other synergies from the transaction may not be fully
realized or may take longer to realize than expected, the risk that
the parties are unable to successfully implement their integration
strategies, the possible failure of the parties to satisfy the
closing conditions in the merger agreement in a timely manner or at
all, including stockholder and regulatory approvals, and
disruptions to the parties’ businesses as a result of the
announcement and pendency of the transaction; economic, social and
political conditions and other securities industry risks; interest
rate risks; liquidity risks; client and counterparty credit risks;
clearing function risks; systemic risk; aggressive competition;
information system risks, network security risks; investment
advisory services risks; merger and acquisition risks; external
service provider risks; employee misconduct risks; LIBOR phase-out
risks; new laws, rules, regulations and regulatory guidance
affecting our business; net capital requirements; extensive
regulation and regulatory uncertainties; and litigation,
investigations and proceedings involving our business. We also are
subject to other risks, uncertainties and assumptions set forth
under Item 1A. – Risk Factors of the Company's annual report on
Form 10-K for the fiscal year ended Sept. 30, 2019 and in other
periodic reports of the Company filed with the SEC after that Form
10-K, as well as the risk that our risk management practices may
leave us exposed to unidentified or unanticipated risks.
Our forward-looking statements speak only as of the date on
which they were made. We undertake no obligation to publicly update
or revise such statements, whether as a result of new information,
future events or otherwise, except to the extent required by the
federal securities laws.
1 See attached reconciliation of non-GAAP financial
measures.
2 Please see the Glossary of Terms, located in the “Investor
relations” section of www.amtd.com under the “Earnings” heading for
more information on how these metrics are calculated.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org) /SIPC (www.SIPC.org).
Advisory services are provided by TD Ameritrade Investment
Management, LLC (“TD Ameritrade Investment Management”), a
registered investment advisor. Brokerage services provided by TD
Ameritrade, Inc. TD Ameritrade Investment Management provides
discretionary advisory services for a fee. Risks applicable to any
portfolio are those associated with its underlying securities. For
more information, please see the Disclosure Brochure (Form ADV Part
2A) http://www.tdameritrade.com/forms/TDA4855.pdf
TD AMERITRADE HOLDING CORPORATION CONSOLIDATED STATEMENTS
OF INCOME In millions, except per share amounts (Unaudited)
Quarter Ended Dec. 31,
2019 Sept. 30, 2019 Dec. 31, 2018 Revenues:
Asset-based revenues: Bank deposit account fees
$
454
$
437
$
428
Net interest revenue
359
413
376
Investment product fees
145
155
143
Total asset-based revenues
958
1,005
947
Transaction-based revenues: Transaction fees and commissions
305
502
537
Other revenues
28
51
32
Net revenues
1,291
1,558
1,516
Operating expenses: Employee compensation and benefits
331
341
317
Clearing and execution costs
50
48
49
Communications
38
36
42
Occupancy and equipment costs
65
67
68
Depreciation and amortization
42
39
35
Amortization of acquired intangible assets
30
32
31
Professional services
97
75
74
Advertising
80
85
58
Other
37
55
46
Total operating expenses
770
778
720
Operating income
521
780
796
Other expense (income): Interest on borrowings
32
37
32
Other expense (income), net
(2
)
2
(14
)
Total other expense, net
30
39
18
Pre-tax income
491
741
778
Provision for income taxes
112
190
174
Net income
$
379
$
551
$
604
Earnings per share - basic
$
0.70
$
1.01
$
1.07
Earnings per share - diluted
$
0.70
$
1.00
$
1.07
Weighted average shares outstanding - basic
541
547
562
Weighted average shares outstanding - diluted
543
549
564
Dividends declared per share
$
0.31
$
0.30
$
0.30
TD AMERITRADE HOLDING CORPORATION CONDENSED CONSOLIDATED
BALANCE SHEETS In millions (Unaudited)
Dec. 31, 2019 Sept. 30, 2019 Assets: Cash and
cash equivalents
$
2,551
$
2,852
Segregated cash and investments
8,536
8,684
Broker/dealer receivables
1,728
2,439
Client receivables, net
21,187
20,618
Investments available-for-sale, at fair value
1,636
1,668
Goodwill and intangible assets
5,401
5,431
Other
2,442
2,094
Total assets
$
43,481
$
43,786
Liabilities and stockholders' equity: Liabilities:
Broker/dealer payables
$
2,482
$
3,308
Client payables
27,351
27,067
Long-term debt
3,555
3,594
Other
1,346
1,117
Total liabilities
34,734
35,086
Stockholders' equity
8,747
8,700
Total liabilities and stockholders' equity
$
43,481
$
43,786
TD AMERITRADE HOLDING CORPORATION SELECTED OPERATING
DATA (Unaudited)
Quarter Ended Dec. 31,
2019 Sept. 30, 2019 Dec. 31, 2018 Key Metrics: Net new assets (in
billions)
$28.7
$22.0
$31.8
Net new asset growth rate (annualized)
9%
7%
10%
Average client trades per day
1,028,239
837,009
927,849
Profitability Metrics:
Operating margin
40.4%
50.1%
52.5%
Pre-tax margin
38.0%
47.6%
51.3%
Return on average stockholders' equity (annualized)
17.4%
25.6%
29.5%
Net profit margin
29.4%
35.4%
39.8%
EBITDA(1) as a percentage of net revenues
46.1%
54.5%
57.8%
Liquidity Metrics:
Interest on borrowings (in millions)
$32
$37
$32
Interest coverage ratio (EBITDA(1)/interest on borrowings)
18.6
22.9
27.4
Cash and cash equivalents (in billions)
$2.6
$2.9
$5.1
Liquid assets (1) (in billions)
$2.8
$2.9
$2.6
Transaction-Based Revenue
Metrics: Total trades (in millions)
64.8
53.2
57.5
Average commissions per trade
$2.61
$7.04
$7.09
Trading days
63.0
63.5
62.0
Order routing revenue (in millions)
$135
$128
$129
Spread-Based Asset Metrics:
Average bank deposit account balances (in billions)
$115.9
$111.5
$114.3
Average interest-earning assets (in billions)
35.9
35.3
30.0
Average spread-based balances (in billions)
$151.8
$146.8
$144.3
Bank deposit account fee revenue (in millions)
$454
$437
$428
Net interest revenue (in millions)
359
413
376
Spread-based revenue (in millions)
$813
$850
$804
Avg. annualized yield - bank deposit account fees
1.53%
1.54%
1.47%
Avg. annualized yield - interest-earning assets
3.91%
4.58%
4.90%
Net interest margin (NIM)
2.10%
2.27%
2.18%
(1) See attached reconciliation of non-GAAP financial
measures. NOTE: See Glossary of Terms on the Company's website at
www.amtd.com for definitions of the above metrics.
TD AMERITRADE
HOLDING CORPORATION SELECTED OPERATING DATA (Unaudited)
Quarter Ended Dec. 31, 2019 Sept.
30, 2019 Dec. 31, 2018 Client
Account and Client Asset Metrics: Funded accounts
(beginning of period)
11,971,000
11,876,000
11,514,000
Funded accounts (end of period)
12,109,000
11,971,000
11,630,000
Percentage change during period
1%
1%
1%
Client assets (beginning of period, in billions)
$1,327.7
$1,306.6
$1,297.5
Client assets (end of period, in billions)
$1,430.2
$1,327.7
$1,161.6
Percentage change during period
8%
2%
(10%)
Net Interest Revenue:
Segregated cash: Average
balance (in billions)
$8.5
$7.6
$2.9
Average annualized yield
1.77%
2.10%
2.01%
Interest revenue (in millions)
$39
$41
$15
Client margin balances:
Average balance (in billions)
$20.4
$20.4
$22.1
Average annualized yield
4.37%
4.98%
5.10%
Interest revenue (in millions)
$228
$259
$289
Securities borrowing/lending:
Average securities borrowing balance (in billions)
$1.8
$1.7
$0.6
Average securities lending balance (in billions)
$2.7
$3.3
$2.7
Net interest revenue - securities borrowing/lending (in millions)
$76
$91
$54
Other cash and interest-earning
investments: Average balance (in billions)
$5.2
$5.6
$4.4
Average annualized yield
1.64%
1.88%
1.83%
Interest revenue - net (in millions)
$22
$27
$20
Client credit balances:
Average balance (in billions)
$20.8
$19.6
$19.3
Average annualized cost
0.11%
0.09%
0.04%
Interest expense (in millions)
($6)
($5)
($2)
Average interest-earning assets (in billions)
$35.9
$35.3
$30.0
Average annualized yield
3.91%
4.58%
4.90%
Net interest revenue (in millions)
$359
$413
$376
Investment Product Fee
Revenue: Fee-based
investment balances: Average balance (in billions)
$179.5
$267.1
$263.6
Average annualized yield
0.32%
0.23%
0.21%
Investment product fee revenue (in millions)
$145
$155
$143
NOTE: See Glossary of Terms on the Company's website at
www.amtd.com for definitions of the above metrics.
TD AMERITRADE
HOLDING CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES Dollars in millions, except per share amounts
(Unaudited)
Quarter Ended
Dec. 31, 2019
Sept. 30, 2019
Dec. 31, 2018
Non-GAAP Net Income and Non-GAAP Diluted
EPS (1)
Amount
Diluted EPS
Amount
Diluted EPS
Amount
Diluted EPS
Net income and diluted EPS (GAAP)
$
379
$
0.70
$
551
$
1.00
$
604
$
1.07
Non-GAAP adjustment: Amortization of acquired intangible
assets
30
0.06
32
0.06
31
0.05
Income tax effect of above adjustment
(8
)
(0.02
)
(8
)
(0.01
)
(8
)
(0.01
)
Non-GAAP net income and non-GAAP diluted EPS
$
401
$
0.74
$
575
$
1.05
$
627
$
1.11
Quarter Ended
Dec. 31, 2019
Sept. 30, 2019
Dec. 31, 2018
$
% of Net Rev.
$
% of Net Rev.
$
% of Net Rev.
EBITDA (2) Net income
(GAAP)
$
379
29.4
%
$
551
35.4
%
$
604
39.8
%
Add: Depreciation and amortization
42
3.3
%
39
2.5
%
35
2.3
%
Amortization of acquired intangible assets
30
2.3
%
32
2.1
%
31
2.0
%
Interest on borrowings
32
2.5
%
37
2.4
%
32
2.1
%
Provision for income taxes
112
8.7
%
190
12.2
%
174
11.5
%
EBITDA (non-GAAP)
$
595
46.1
%
$
849
54.5
%
$
876
57.8
%
As of
Dec. 31,
Sept. 30,
June 30,
Mar. 31,
Dec. 31,
2019
2019
2019
2019
2018
Liquid Assets (3) Cash
and cash equivalents (GAAP)
$
2,551
$
2,852
$
2,953
$
2,674
$
5,117
Less: Non-corporate cash and cash equivalents
(2,257
)
(2,478
)
(2,004
)
(2,020
)
(4,247
)
Corporate cash and cash equivalents
294
374
949
654
870
Corporate investments
1,636
1,668
1,129
894
884
Excess regulatory net capital over management targets
891
859
689
1,061
862
Liquid assets (non-GAAP)
$
2,821
$
2,901
$
2,767
$
2,609
$
2,616
Note: The term "GAAP" in the following explanation
refers to generally accepted accounting principles in the United
States.
(1)
Non-GAAP net income and non-GAAP diluted earnings per share
(EPS) are non-GAAP financial measures as defined by SEC Regulation
G. We define non-GAAP net income as net income adjusted to remove
the after-tax effect of: (1) amortization of acquired intangible
assets and (2) acquisition-related expenses associated with the
Company's business acquisitions. We consider non-GAAP net income
and non-GAAP diluted EPS as important measures of our financial
performance because they exclude certain items that may not be
indicative of our core operating results and business outlook and
may be useful in evaluating the operating performance of the
business and facilitating a meaningful comparison of our results in
the current period to those in prior and future periods.
Amortization of acquired intangible assets is excluded because
management does not believe it is indicative of our underlying
business performance. Acquisition-related expenses are excluded as
these costs are not representative of the costs of running the
Company’s on-going business. Non-GAAP net income and non-GAAP
diluted EPS should be considered in addition to, rather than as a
substitute for, GAAP net income and GAAP diluted EPS.
(2)
EBITDA (earnings before interest, taxes, depreciation and
amortization) is considered a non-GAAP financial measure as defined
by SEC Regulation G. We consider EBITDA to be an important measure
of our financial performance and of our ability to generate cash
flows to service debt, fund capital expenditures and fund other
corporate investing and financing activities. EBITDA is used as the
denominator in the consolidated leverage ratio calculation for
covenant purposes under our senior revolving credit facility.
EBITDA eliminates the non-cash effect of tangible asset
depreciation and amortization and intangible asset amortization.
EBITDA should be considered in addition to, rather than as a
substitute for, GAAP pre-tax income, net income and cash flows from
operating activities.
(3)
Liquid assets is considered a non-GAAP financial measure as
defined by SEC Regulation G. Liquid assets represents available
capital, including any capital from our regulated subsidiaries in
excess of established management operational targets. We include
the excess capital of our regulated subsidiaries in the calculation
of liquid assets, rather than simply including regulated
subsidiaries' cash and cash equivalents, because capital
requirements may limit the amount of cash available for dividend
from the regulated subsidiaries to the parent company. Excess
capital, as defined below, is generally available for dividend from
the regulated subsidiaries to the parent company. Liquid assets
should be considered as a supplemental measure of liquidity, rather
than as a substitute for GAAP cash and cash equivalents.
Liquid assets may be utilized for general corporate purposes
and is defined as the sum of (1) corporate cash and cash
equivalents, (2) corporate investments, less securities sold under
agreements to repurchase and (3) our regulated subsidiaries' net
capital in excess of minimum operational targets established by
management. Corporate cash and cash equivalents includes cash and
cash equivalents from our investment advisory subsidiaries. Liquid
assets is based on more conservative measures of net capital than
regulatory requirements because we generally manage to higher
levels of net capital at our regulated subsidiaries than the
regulatory thresholds require.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200121005874/en/
Becky Niiya Director, Corporate Communications (402) 574-6652
rebecca.niiya@tdameritrade.com
Jeff Goeser Managing Director, Investor Relations (402) 597-8464
jeffrey.goeser@tdameritrade.com
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